South Africa may have largely moved beyond the sustained phases of loadshedding that defined recent years; however, energy costs continue to climb, global professional body the Chartered Institute for Procurement & Supply (CIPS) indicates.

In March, the National Energy Regulator of South Africa approved electricity tariff increases of 8.76% for direct customers of State-owned utility Eskom and 9.01% for municipal customers for the 2026/27 financial year, adding further pressure to businesses already grappling with rising operating and logistics costs, the professional body points out.

It warns that the challenge for procurement and supply chain leaders this year is managing the growing cost, reliability and risk implications of an energy system that remains under pressure.

“Energy uncertainty has not disappeared; it has evolved. Today, organisations are increasingly dealing with infrastructure failures, maintenance backlogs and localised network disruptions, particularly at municipal level, that are often less predictable than loadshedding itself. From a supply chain perspective, unpredictability creates significant operational risk,” CIPS regional MD Paul Vos explains.

The impact is being felt across supplier networks. Electricity tariffs continue to rise above inflation, while fuel costs remain a major concern for transport, logistics and backup generation requirements, CIPS avers.

"This creates a double cost pressure. Suppliers are facing higher energy costs and higher logistics costs simultaneously. As a result, procurement teams are seeing greater pricing volatility, more requests for contract adjustments and increased pressure on budgets,” Vos explains.

The sectors most exposed include heavy manufacturing, food production and processing, cold-chain logistics and refrigeration-based supply chains, mining, chemicals, water infrastructure and other energy-intensive industries that underpin essential goods supply chains, CIPS avers.

It notes that, while several manufacturers have attempted to absorb a portion of these increases through efficiency improvements and operational adjustments, there is a limit to what businesses can absorb before costs begin filtering through the value chain.

“We continue to see gradual price increases across a range of products and services. Ultimately, a significant portion of energy-related cost escalation finds its way to customers and consumers,” Vos points out.

In response, organisations are adopting more proactive procurement strategies focused on resilience rather than cost alone. Supplier diversification, nearshoring, regional sourcing, scenario planning and enhanced cost modelling are becoming increasingly common, CIPS informs.

“Procurement is shifting from a transactional function to a resilience enabler. Energy risk is increasingly being built into supplier selection and sourcing decisions, alongside traditional supplier evaluation criteria such as quality, delivery and price,” Vos expands.

Businesses are said to be increasingly exploring power purchase agreements, embedded solar generation, battery storage and hybrid energy models to reduce reliance on grid infrastructure while improving long-term cost predictability.

“The conversation around renewable energy has changed. For many organisations, it is no longer primarily a sustainability initiative. It is a business continuity and resilience strategy,” Vos emphasises.

He stresses that procurement contracts need to evolve to reflect a more volatile operating environment.

Mechanisms such as energy-linked escalation clauses, agreed pricing thresholds, open-book costing models, risk-sharing mechanisms and structured review periods are proffered as solutions to assist both buyers and suppliers manage risk more effectively.

“The objective is to ensure that risk is allocated fairly and managed transparently across the supply chain,” Vos explains.

Looking ahead, CIPS Southern Africa believes procurement leaders must treat energy insecurity as a strategic business issue rather than an operational concern.

Short-term priorities include conducting energy-risk assessments across supplier networks, identifying high-exposure categories and strengthening supplier engagement. Longer term, organisations will need to embed energy risk into category strategies, build stronger supplier partnerships and align procurement decisions with broader energy-transition objectives, the professional body posits.

“Energy is no longer simply a facilities issue. It has become a core supply chain risk that requires coordinated leadership across procurement, finance and operations,” Vos states.

As South Africa’s energy challenges evolve, the organisations best positioned for long-term success will be those that embed resilience into procurement decisions, supplier strategies and operational planning, rather than treating energy risk as a standalone operational concern, CIPS highlights.